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Assessing the Role of Foreign Direct Investment (FDI) Influencing Liberia’s Trade Patterns

Author

Listed:
  • C. N. Willie

    (Sichuan Agricultural University, China)

  • N. N. Dolo

    (Sichuan Agricultural University, China)

  • Q. D. Johnson

    (Sichuan Agricultural University, China)

Abstract

This study quantitatively investigates the role of Foreign Direct Investment (FDI) in shaping Africa’s and specifically Liberia’s trade patterns from 2000 to 2023, focusing on sectoral distribution, regional disparities, and institutional mediators. Drawing on a 23-year panel dataset covering 40 African countries, the research integrates fixed-effects regression, the Gravity Model of Trade, and Herfindahl-Hirschman Index (HHI) metrics to measure export diversification outcomes. Empirical results reveal that extractive FDI remains dominant—constituting 65% of Africa’s total inflows and accounting for over 60% of export revenue—yet it exhibits negligible impact on trade diversification (p = 0.58). In contrast, manufacturing FDI shows statistically significant positive effects on diversification (β = 0.30, p

Suggested Citation

  • C. N. Willie & N. N. Dolo & Q. D. Johnson, 2025. "Assessing the Role of Foreign Direct Investment (FDI) Influencing Liberia’s Trade Patterns," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(7), pages 5844-5861, July.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-7:p:5844-5861
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    References listed on IDEAS

    as
    1. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    2. Asongu, Simplice A. & Odhiambo, Nicholas M., 2020. "Foreign direct investment, information technology and economic growth dynamics in Sub-Saharan Africa," Telecommunications Policy, Elsevier, vol. 44(1).
    3. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
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